New DOL Guidance Makes State “Workshare” Programs More Attractive for Employers

May 08, 2020

Employers that enroll in state workshare programs that let employees collect partial unemployment while working a reduced schedule may not be charged for those benefits during the COVID-19 pandemic, according to new guidance from the U.S. Department of Labor.

The short-time compensation (STC) program (also known as “worksharing”) is a state run lay-off aversion program in which an employer, under a state-approved plan, can reduce the hours worked for a group of employees, and those individuals would in turn receive a reduced unemployment benefit payment.

Under the new guidance, states may “choose not to charge” employers for the STC payments to partially employed workers because the CARES Act provides 100 percent federal financing for STC payments until December 31, 2020.

Takeaway: In the context of re-opening businesses closed temporarily by the pandemic, STC can serve as a means of bringing most or all of a temporarily laid-off workforce back to the job, even if social-distancing measures, a decline in business, or other factors prevent operating at full staffing levels.